Depending on where hoteliers stand, by market and chain scale, the U.S. hotel industry recovery from the COVID-19 pandemic is either fully underway or woefully behind.
Hoteliers with branded, economy assets near a highway are already achieving revenue per available room equal or exceeding pre-pandemic 2019 levels, according to the latest monthly data from STR, CoStar’s hospitality analytics firm.
But hoteliers with branded, upper-upscale properties are still struggling to bring in even half of the RevPAR recorded in 2019.
The higher-end hotels are dragging down total U.S. hotel industry RevPAR, which for May was 23% below 2019 levels.
“Keep in mind though that this average hides the fact that a) May RevPAR for economy branded hotels is already 2.8% above 2019 levels, but that b) upper-upscale branded properties RevPAR is still 47.5% below the May 2019 value,” Jan Freitag, national director of hospitality analytics for CoStar Group, said in his monthly video analysis of U.S. hotel performance.
“The other positive RevPAR number to mention is that hotels near highway and interstate locations are running the same RevPAR they achieved in May 2019,” he added.
At the same time, U.S. hotel occupancy for May exceeded 2020 levels, while still coming in below the three-year average.
Room rates are also outperforming 2020, with average daily rates for May almost $40 higher than the year before, led by hotels in the luxury, midscale and economy classes.
“Occupancies are growing rapidly, and in some instances, room rates are above 2019 levels,” Freitag said.
“For luxury hotels, room rates have recovered and are now well above where they were two years ago. In fact, in May, luxury class ADR was $320, whereas in May of 2019 it was only $296. Now it's true that a mix shift has occurred and these rooms are mostly sold to leisure travelers that traditionally pay higher rates. We therefore expect that room rate growth for luxury hotels will slow as we enter the fall season and luxury group travelers and corporate accounts will slow luxury ADR growth.”
The data also shows group bookings at hotels have shifted more heavily to the weekend, which suggests that in the absence of corporate groups, group demand is being led by social gatherings, from “postponed weddings or birthdays or family reunions,” Freitag said.
Other positive signs for the hotel industry recovery include an increase in airline passengers, including more than 1 million flying on Tuesday and Wednesday, which Freitag pointed out certainly includes business travelers “and that bodes well for the fall.”
For Freitag's full insights, watch the video above.